Zero Hours Contracts NOT Unlawful

The ECJ has decided that provisions of Italian law permitting the use of zero-hours contracts for workers aged 25 or under, including provision for automatic dismissal at age 25, were not unlawful age discrimination. In the context of the difficult conditions of the Italian labour market, the court concluded that the Italian government had a legitimate aim of facilitating the entry of young people to the labour market and that its means of doing so were appropriate and necessary.

Since there is no equivalent provision in the UK, this decision is of limited direct relevance. However, the Advocate General's thoughts on objective justification of policies aimed at younger workers will be of interest to UK employment lawyers. (Abercrombie & Fitch Italia Srl v Bordonaro (C-143/16) EU:C:2017:566.)

BACKGROUND:

EU law

Article 2 of the Equal Treatment Framework Directive (2000/78/EC) (the Directive) precludes direct age discrimination. Nevertheless, member states may provide that no discrimination will occur where there is a difference of treatment on the ground of age which, within the context of national law, is objectively and reasonably justified by a legitimate aim and the means of achieving that aim are appropriate and necessary (Article 6(1)).

Italian law

Italian law permits certain younger and older workers to be engaged on "on-call" contracts (what we refer to as "zero hour contracts" in the UK) in all circumstances. At the relevant time, this meant workers aged under 25 or over 45. In addition, a young worker engaged on an on-call contract had to be dismissed as soon as they reached age 25 (Article 34 of Legislative Decree No 276/2003). In contrast, workers aged 25 to 45 could only be engaged on on-call contracts in certain circumstances and subject to conditions. The precise legal provisions have since varied, but remain the same in substance.

In the case reported below, the ECJ had to consider whether Article 34 constituted unlawful age discrimination, contrary to the Directive.

Facts

Mr Bordonaro was employed by Abercrombie & Fitch (A&F) on an on-call employment contract from 14 December 2010, working on average three to five times per week. On 30 July 2012, he was notified that his employment had been terminated on 26 July 2012, the date of his 25th birthday, because, from that date his employment no longer complied with Article 34 (see Italian law above).

He brought a claim alleging that his contract and his dismissal were unlawful and asked for reinstatement. This was refused and he appealed to the Court of Appeal in Milan, which held that both the on-call employment contract and his dismissal were discriminatory.

A&F appealed to the Italian Supreme Court, which stayed proceedings and asked the ECJ whether Article 34 breaches the Directive with respect to the use of on-call contracts for workers aged 25 and under.

Advocate General Bobek gave an opinion that:

Mr Bordonaro was clearly a worker.

It was not clear whether Article 34 caused less favourable treatment on the grounds of age; this was a matter for the Italian courts to determine.

Article 34 potentially pursued legitimate aims, although it was important for the Italian courts to identify which aim, as this was a required step in order to then consider whether the aim was appropriate and necessary.

He had some reservations about whether Article 34 was an appropriate and necessary means of pursuing the legitimate aim(s) it purported to achieve. These were matters that the Italian courts would need to determine.

The ECJ's conclusion goes a step further than Advocate General Bobek's opinion, which had said that there were a number of issues for the Italian courts to determine, particularly in relation to objective justification (see Facts).

Worker status

The ECJ considered that it was probable that Mr Bordonaro was a worker, in large part on the basis of his regularity of hours (see Facts). It concluded that his work could not be described as purely marginal and ancilliary.

Less favourable treatment

The Advocate General had noted that the parties disagreed whether Article 34 amounted to less favourable treatment, and opined that either could be correct (the matter to be determined by the Italian courts). In contrast, the ECJ was clear that Article 34 does treat the under-25s less favourably. There was a clear difference in treatment: the under 25s could be engaged on on-call contracts in any circumstances, without conditions, and faced automatic dismissal on reaching 25.

Justification

The ECJ held that Article 34 pursues a legitimate aim of facilitating the entry of young people to the labour market. The court had regard to the difficulties in the Italian labour market, including that young people find it difficult to enter the labour market due to a lack of professional experience. Article 34 seeks to facilitate younger people gaining professional experience and so entering the labour market.

The court further held that Article 34 was an appropriate and necessary means of achieving the legitimate aim, including for the following reasons:

It was possible to take the view that employers may be encouraged to hire younger workers if they know that they can do so using more flexible, and cheaper, contractual arrangements than the norm.

In the context of a labour market in difficulty such as the one in Italy, it is preferable for a younger person to have flexible and temporary work than be unemployed.

If the ability to automatically dismiss people when they reach age 25 did not exist, meaning that the employer had to keep employing such people, the employer would not be in a position to offer work to new, under-25, workers.

Comment

Since the use of zero hours contracts in the UK is not restricted by age group, this opinion has little immediate relevance for us. Nevertheless, there remain points of interest to UK employment lawyers:

The judgment is robust in its acceptance of the Italian government's arguments on objective justification, and markedly more so than the Advocate General was. The court's views are relevant to any review of policies and measures aimed at younger workers, and will be even more so should labour market conditions in the UK deteriorate.

Whilst less emphatic than the Advocate General, the court considered it probable that Mr Bordonaro was a worker under EU law, on the basis that he had worked three to five times per week during a period of over a year and a half. This argument could be relevant to self-employed contractors in the UK hoping to establish worker status.